It's probably not a secret to many that there is a tax credit of up to $7,500 for purchasing an electric vehicle in 2023. This credit has existed before, but there have been some changes and additions. Let's break it down.
Who can qualify for the credit? What are the criteria?
First and foremost, the vehicle must be purchased for personal use, not for resale.
The vehicle must primarily be used in the United States.
Your income matters, specifically your adjusted gross income (AGI), which should not exceed $300,000 for joint filers, $225,000 for heads of household, and $150,000 for all other filing statuses. Note: you can use either your 2023 AGI or the year before you obtained the vehicle, which is 2022.
Please note that this credit can only reduce your tax liability and cannot be used for a refund. In other words, if you have little or no tax liability, you won't receive the full credit or, accordingly, you'll receive a credit only up to the amount of your tax liability. Any remaining credit cannot be carried over to future years.
Which electric vehicles qualify for this credit?
The battery capacity must be a minimum of 7 kWh.
The total weight must be less than 14,000 pounds.
The vehicle must be manufactured by an approved manufacturer and within North America.
The vehicle's cost should not exceed $80,000 for vans, sports cars, and pickups; $55,000 for all other vehicles.
If the vehicle is purchased after April 18th, it must meet certain mineral and component requirements in the battery (related to mining, processing, and production of minerals and components in North America). This information will be specified on a sticker on the vehicle's windshield.
To calculate the amount of the credit, the date of receiving the vehicle is used, not the date of signing the contract: If the vehicle was received between January 1 and April 17:
$2,500 is the base credit amount.
+$417 for a battery with a minimum of 7 kWh.
+$417 for each additional kWh of battery capacity beyond 5 kWh.
$7,500 is the maximum credit amount.
If the vehicle was received after April 18, the above requirements are supplemented by the mineral and component requirements of the battery, which affects the credit amount:
$3,750 if the vehicle meets only the mineral criterion for the battery.
$3,750 if the vehicle meets only the component criterion for the battery.
$7,500 if the vehicle meets both criteria for the battery.
More information:
https://www.irs.gov/credits-deductions/used-clean-vehicle-credithttps://www.irs.gov/credits-deductions/commercial-clean-vehicle-credit
